# EASILY EXPLAINED: Shares outstanding, float and market cap

by , 14 July 2022

Q. “I've been looking at stock trading lately. I see each share is calculated according to market capitalization. I'm trying to wrap my head around this. Could you explain the difference between market capitalization, shares outstanding and shares floating?”

A. With stock, you are 100% correct in saying it is calculated by market cap.
Each listed (public) company has two types of share.

Shares outstanding and shares floating.

Before we calculate the market cap, we first need to identify the difference between the types of share.
 Shares outstanding in a nutshell Shares outstanding consists of ALL the shares of a company. These are shares that are authorized, issued and purchased by investors and are held by them. Shares outstanding also include shares that are not available to trade including: 1.    Restricted shares 2.    Treasury shares 3.    Closely held shares Float shares explained Float shares are the total number of shares that are available to the public to trade. When it comes to market capitalization, we’ll need to take into account ALL the shares available in total. So, here’s an easy calculation you can use: Market Capitalization = (Market share price X Outstanding shares). To calculate the market-cap, let’s use a made-up company called FSP Ltd. FSP has three companies: Company F, Company S and Company P. Here’s the table to work out the market capitalization of the company
 So, you can see Company FSP’s market cap would be worth R5.2 billion. This will also give you an indication on whether the company you want to trade is small cap, mid cap or large cap.

You’ve made trading sound so easy and straight forward and I’ve so far closed three winning trades in the last month thanks to you!

Keep it up and looking forward to the next trade.

 4.    Choose the number of CFDs you wish to close and click enter 5.    Done!   If you still feel anxious, you can call your broker and confirm you have closed your trades successfully. Happy and stress-free flying for the next time you travel. PS.  In the last 32 days, we've closed three nice little trades on Sasol, Anglos and BHP.  That's a cumulative profit of 72.33% from these three wins in a row.  My fourth trade is lining up so if you want in on these kinds of profits, you can join my group of Red Hot Storm Traders here.